Water: A Business Philosophy for Success in Hard Times

Wall Street’s troubles have not only filtered down to Main Street. They have crushed Main Street. With cash flow and credit lines drier than a cracked creek bed in Nevada, nearly every small business we know is simply scrambling to survive.

We are not immune to this distress at Knowledge Mosaic. We have lost major accounts to companies that have gone out of business or been acquired. Sometimes cash seems so tight, my neck twists, my eyes bulge, and my legs dangle.

But then I slip the noose. I am optimistic about our future. Even as Deathand Mayhem stalk the land, I think we will be okay. And this is why.

In this new century, business success will require that companies flow like water around obstacles that stand in their way. Water finds its own path and gradually erodes obstacles and creates new channels that represent its “will”.

Businesses that flow like water are flexible and nimble. They are incredibly attuned to what is going on it their environment – with their customers, their competitors, their vendors, their employees, their finances. They respond in real time.

In the absence of cash flow and credit lines, businesses have no choice but to adopt this organizational mantra of “liquidity”. Liquid businesses know their ultimate destination, but are not locked into specific paths to arrive at this destination. They will consider any and all options for solving problems or advancing goals, but will not waste time on belabored decision-making.

Few decisions are so critical or risky that they require endless deliberation or certainty. Rather than make a few big decisions, make many little decisions. Respond in real time. Adjust in real time.

Finally, a business that flows like water has no ego. Its being derives from its essence and its journey, not its roles or attributes.

This is abstract. Let me give a concrete example of what I mean. The premise for vast executive pay packages is that a business cannot survive without its leaders. This perspective promotes an egocentric view of leadership, in which the leader provides a center of gravity for the organization that justifies the material attributes of his (or her) role – the large salary and bonus, the stock grants, the private aircraft, etc. The energy of the employees and the board members of these companies flows inward, toward the leader.

This is a failed model of leadership for the 21st century. Successful leaders in liquid enterprises exist to serve others. They wash the feet of their employees, their investors, and their customers. Their identity has nothing to do with compensation and status, and is instead bound up directly with the mission of the business, with its essence and its journey, with nurturing and supporting and honoring those whose commitment and growth and energy sustain the business. In “liquid” businesses, energy flows from the center to the periphery, to where the business is moving next.

What makes this leadership model work in troubled times is that liquid businesses can operate without fear. Existentially, all of us fear loss and, ultimately, physical death, which is loss multiplied by Google. In a business, fear addresses the loss of privilege, status, and position – either within an organization or in relation to competition or in absolute financial terms. When Lehman went under, for example, it experienced absolute financial death, loss multiplied by Google.

But water does not have fear. It exists only in relation to its motion, which by definition is incessant, and so has nothing to lose. A rock slamming into another rock might shatter. That is loss, or death. That is what egos experience. Water encountering a rock will divide and flow around it and rejoin itself. Water, lacking an ego, cannot be split, and so it has nothing to fear.

In practical terms, this means that a liquid business and liquid leadership will adapt to whatever environment it faces, no matter how outwardly troubled. Without an ego, the business will simply wrap itself around the circumstances of the moment and locate opportunity. With opportunity, there is a destination, and with a destination, there is motion, and with motion there is life and hope.

For a remarkable example of this kind opportunism, read this fascinating history of the Torrington Company, now a $1.2 billion subsidiary of Ingersoll-Rand that reinvented itself during the Depression.